Procurement Says Goodbye To Business As Usual [INFOGRAPHIC]

Amy Moore

Do you remember the game “Operation”? You use metal tweezers to extract small plastic butterflies, spare ribs, and other body-part puns out of a cartoon man’s body. If the tweezers touch the metal sides of the “incision” site, the patient’s nose lights up with a little “zap” and you lose your turn. The zap is fun, but the feedback doesn’t really help you learn what to do better next time. And the challenge wears off very quickly—making the game much more boring than I remember it being in my youth. And therein lies the problem with games that require no strategy: The players lose engagement.

Which brings me to the topic of procurement operations. Is procurement in danger of holding on to tactical ways of working and measuring value—all while trying to rise to an expanded, more strategic role within the organization? Are the KPIs in play at many organization like the buzz of the cartoon tweezers—quick at giving basic feedback, but woefully ineffective at driving meaningful change?

New goals, new rules

In their research on the future of procurement, Oxford Economic reports that for procurement to become more collaborative and strategic,  the function may need to say “goodbye to business as usual.” Trends like “procurement owning the supplier relationship” are significantly changing the way procurement operates, and procurement executives are keeping up by investing in talent, training, and technology.

And yet, there’s a talent and KPI gap when it comes to strategic focus. Only 22% of practitioners feel proficient in the area of strategic thinking, and executives agree that it’s the most difficult skill to find. Meanwhile, traditional KPIs like cost savings and cost avoidance might incentivize traditional skills, while strategic KPIs like “impact on revenue from innovation” get little attention from execs.

On the top of their game

According to Oxford, companies with higher-than-average revenue growth might be playing a new game of Operation, with new rules of play. Oxford reports that these companies are more likely than the others surveyed to use collaboration platforms and B2B commerce networks in day-to-day work two years from now. In keeping with the well-known premise that “what gets measured gets managed,” these organizations are also more likely to be using KPIs that measure strategic collaboration—namely supplier quality and the number of suppliers with automated collaboration.

The moral of the story? Old games are great for nostalgia, but bad for business. If procurement is going to truly get strategic, it’s time to rewrite the rules and reengage the players.

Enjoy the infographic below for more interesting information from Oxford on the future of procurement operations.


Top image credit: Alec Couros from Flickr

About Amy Moore

Amy Moore is the Content Marketing Director for SAP Procurement and Ariba solutions. Her specialties include messaging strategy, content strategy, and content development.